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Aol, Sun Microsystems, Netscape Talk About Merger

November 23, 1998|By From Tribune News Services.

WASHINGTON, D.C. — In an alliance that would change the landscape of the nation's technology industry, America Online is in talks to buy Netscape Communications Corp. in a deal that also involves Sun Microsystems Inc., a source close to the situation said Sunday.

It was unclear whether any formal announcement would be made before financial markets opened Monday, but the source said that under one scenario the $4 billion, all-stock transaction would leave AOL to run Netscape's "Netcenter" Web site and to distribute Netscape's popular browser, the software that lets people view information on the Internet.

Sun Microsystems, in turn, would benefit in two ways: It would take control of Netscape's business-level server software and it would enjoy widespread distribution among AOL's 14 million subscribers of its Java technology for running Internet programs.

The companies have been in negotiations for at least two weeks and all weekend. AOL currently distributes Internet software by rival Microsoft Corp. to its subscribers.

Newsweek magazine, in issues appearing on newsstands Monday, and The Wall Street Journal's Web site first reported the discussions Sunday.

An AOL-Netscape deal had been considered before, in part to stem competition from Microsoft. In late 1995, when Netscape's browser was the industry's leader, AOL Chairman Steve Case negotiated with Netscape to distribute the company's browser to his millions of AOL subscribers.

Since then, AOL has added millions of new subscribers while Netscape's share of the browser market has dropped dramatically due to competition from Microsoft.